Clare McLeish of Coodes Solicitors warns of the pitfalls of transferring money to a family member in an attempt to avoid care home fees.
The cost of care is rising at a record rate, with the average room in a care home now costing over £33,000 a year. It is no surprise then that people may consider drastic steps to avoid paying for care.
Local councils will fund care for people who are eligible for financial help. This involves a means test, which will examine your income as well as your savings and assets. If your savings and assets are above £23,250 you will have to pay for your own care. If the total is between £14,250 and £23,250 the local council will fund some of your care and you will cover the rest. If it falls below £14,250 your local authority will give you a free place in a care home. While the council will take your needs into consideration, you will not have as much choice about where you go as you would if you were paying for your own care.
It can be a shock to discover just how much you will have to pay to stay in a care home. Many people understandably feel apprehensive about spending their life savings on care. Faced with this situation, some consider transferring their house or savings to a family member – typically a son or daughter – to avoid care home fees. This can seem like a good idea, as it would bring down the value of your assets while also passing on an inheritance to your loved ones. However, it is not that simple.
Local councils scrutinise each case, including assessing whether or not the individual recently transferred money or assets. If they discover that you transferred money in an attempt to avoid care home fees they will refuse to pay for your care.
If you transfer your assets or savings when you are likely to soon need care, it is very likely that the local council will find out when they carry out their searches. Once they have proved that you deprived yourself purposely in an attempt to avoid care home fees, they will refuse your application for funding. It is then up to you to fight your corner if you feel their decision was wrong. This is likely to be a very stressful experience at what is already an emotional time.
Transferring your life savings or your house also makes you very vulnerable. If you pass the money onto your son or daughter, for example, and they then go bankrupt or get divorced, your assets could be lost completely. There is also the potential for financial abuse, with older people being at risk of being pressurised by younger family members to pass on their inheritance to avoid costly care home fees.
Because transferring assets or savings is not recommended, our clients often ask if there is anything they can do to try and protect part of their estate against care home fees. Through appropriately structured Wills at least part of a couple’s estate may be protected if one spouse were to die. We would therefore recommend that spouses review their Wills and ownership of the family home. It is possible for couples to make sure that they each own a distinct share in the property. In a Will it is also possible to put a share of the property into trust. This means that, if the husband or wife passes away, the surviving spouse can use and enjoy the whole property but ultimately the deceased spouse’s share of the property passes down to their chosen beneficiaries.
We have a team of lawyers with elderly client expertise to give you the best chance of getting it right.
The charity Age UK has some useful advice on care homes for older people and their family members.
Clare McLeish is a Solicitor in Coodes Solicitors’ Wills, Probate and Trusts team and a member of Solicitors for the Elderly. For more information, contact Clare on 01872 246200 or email@example.com